At issue in In re West, — B.R. —-, No. 07-23398-JKF, (Adv. No. 08-2075, Bkrtcy.W.D. Pa., Nov. 19, 2009) was whether Section 108(a) or Section 108(b) of the Bankruptcy Code extends the time within which the debtor may rescind a mortgage under TILA. The debtors asserted that their rescission claim was not time barred because under Section 108(a) they had two years from the filing of the Bankruptcy to bring a claim for relief. It was their position that they gave notice of rescission within the allotted time as extended under § 108(a) when they commenced the adversary. The defendant contended that § 108(b) applied. That section provides that if applicable nonbankruptcy law * * * fixes a period within which the debtor * * * may file any pleading, demand, notice * * * the trustee may only file, cure, or perform, as the case may be, before the later of (1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or (2) the 60 days after the order for relief. The court agreed with the defendant. Pursuant to TILA, the right to rescind is effectuated by notifying the creditor of the consumer’s intention to do so. To exercise the right the consumer has to notify the creditor of the rescission by mail, telegram, or other means of written communication. The court read this to mean that the consumer must actually give notice to the creditor and the commencement of the adversary action is not notice. The court noted that other courts have determined that the filing of a complaint seeking rescission can qualify as notice to satisfy the terms of TILA but it is notice that is required by the statute and not the commencement of an action under § 108. As such, the applicable subsection is § 108(b) which provides an additional sixty days from the order for relief to serve notice where that extension is longer than the period provided by nonbankruptcy law.
Author
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Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
